As nation eyes big reforms, a flashback to Manmohan Singh's 1991 Budget speech that changed India's economic destiny

With Union finance minister Nirmala Sitharaman set to present the first full-year Budget of the Modi 3.0 government, the government's priority would be to arrest slowing economic growth and spur consumption.

The government will also have to take into account an uncertain year of global trade with Donald Trump back at the helm in US and volatility persisting in the Middle East.

In an interview to Moneycontrol, IMF's Former Executive Director Surjit Bhalla said that India needs 1991-like reforms in this year's Budget to reshape the economy and bring in substantial change on the ground.

Bhalla said that the reforms introduced in the 1991 Budget have continued but there has not been substantial changes in the last three and a half decades.

"Now, the question is: do we need a substantial change? On that score, my answer is yes and we need substantial change in our policies in terms of tax rates and FDI," he told Moneycontrol.

In essence, the February 1 Budget presents a prime opportunity to administer the economic stimulus that India needs to regain its momentum.

Throwback to 1991 Budget

The call for an economic revival also brings afresh memories of the landmark 1991 Budget which was presented by late former finance minister Manmohan Singh.

The landmark Budget, which opened up India to the world, went down in history as one of the greatest reforms introduced in the country since Independence.

Manmohan Singh read out the Budget on July 24, 1991 - at a time when a fragile Indian economy was facing a severe balance of payments crisis.

The 1991 Budget introduced sweeping economic reforms that liberalised the country and unveiled measures to boost domestic growth.

In his speech, Manmohan reminded the House that India was left with just 15 days worth of forex reserves in its kitty.

"The current level of foreign exchange reserves, in the range of Rs.2500 crores, would suffice to finance imports for a mere fortnight," he said.

Without mincing his words, Manmohan said that there is no time to lose. "Neither the Government nor the economy can live beyond its means year after year."

He then announced measures to "liberalise the policy regime for direct foreign investment" into India.

The former finance minister also announced a radical policy that would end the crippling license raj system in the country.

"It is essential to increase the degree of competition between firms in the domestic market so that there are adequate incentives for raising productivity, improving efficiency and reducing costs. In the pursuit of this objective, we have announced important changes in industrial policy which will bring about a significant measure of deregulation in the domestic sector, consistent with our social objectives and the binding constraints on the balance of payments," Manmohan told Parliament.

The then Congress government also took the historic step of opening up Indian economy to the world - facilitating a two-way access to global markets and technologies.

At the end of his speech, Manmohan quoted famous novelist Victor Hugo, saying "No power on earth can stop an idea whose time has come”.

He borrowed the iconic line from renowned poet Girija Kumar Mathur's composition "Hum Honge Kaamyab".

"I do not minimise the difficulties that lie ahead on the long and arduous journey on which we have embarked. But as Victor Hugo once said, 'No power on earth can stop an idea whose time has come'. I suggest to this august House that the emergence of India as a major economic power in the world happens to be one such idea. Let the whole world hear it loud and clear. India is now wide awake. We shall prevail. We shall overcome".